I had an acting job that took place in December, but I wasn’t paid until January.
Am I supposed to include that income on my 2012 tax return, or my 2013 tax return?
I’d ask the IRS, but my tinfoil hat is at the cleaners and I’m afraid they’ll read my thoughts.
You should be getting either a W-2 or 1099 form reporting your income from your employer. That will have the correct amount.
Technically, you should have received it by now, though the IRS doesn’t really hold employers feet to the fire for it and will tell you to wait another month.
I know the amount, and I can report it even if I don’t get a 1099 at all – I’ve done it before.
I just want to know whether to include it in my 2012 income because that’s when I did the work, or with my 2013 income because that’s when I got paid.
You can do it either way, as long as you do it consistently with all your expenses and income and with prior returns.
Most taxpayers file using a cash basis accounting method, meaning they count any income or costs to have occurred in the year in which payment was actually made. Most people find this method easier as far as record-keeping is concerned.
Some taxpayers file using an accrual basis, where one keeps track of when income was earned and costs were incurred, regardless of when they were paid. The rules on how this is done are somewhat more complicated than using a cash basis.
Since you have to ask, I would guess that you haven’t been using an accrual accounting method and should include the income with next year’s return.
Yes, I use the cash-basis method. It just so happens that I’ve never had a job and the payment associated with it be split across Jan. 1.
Thanks for explaining!
The only problem with the cash accounting method is if you do get a 1099 and it reports the income as 2012 income even though you didn’t get it until 2013, the IRS will expect to find that income for in last year’s taxes. There won’t be a big problem, but there will probably be two rounds of letters back & forth to the IRS. In those cases it’s simply easier to report the income where they expect to find it.
I’ve had that happen to me a couple of times. The first time I tried twice to explain that the income had in fact been reported. An agent finally told me to file an amended return for the second year (as they’d already “amended” my return for the firs year). I won big time on that as it moved income from a high income year to a low income year. The next time, I just accepted their adjustment and filed the amended return for the second year. I won that time as well as tax rates had gone up.